GDP growth slowed to 3.1% y/y in Q3 2018 from 3.8% in Q2, the central bank (NBU) has estimated. While agriculture was one of the main growth drivers in Q2, growth in agriculture slowed in Q3 because of early harvesting this year and lower wheat and barley yields, said the NBU. We note that agricultural harvest is expected to eventually be better this year than last year. Also, the manufacturing sector was affected by external factors, logistical problems, repairs works in the metals and mining industry, and base effects in the chemical industry in Q3, said the NBU. In the meantime, business confidence declined for the second quarter in a row, said the NBU.
The NBU maintains its 3.4% GDP growth forecast for this year, which is in line with recent expectations of the IMF and the EBRD. Private consumption will remain the main growth driver, said the NBU, which expects it to grow by 5.5% this year, on the back of growing incomes. Next year, growth is expected by the NBU to slow to 2.5%, one the back of the expected global economic slowdown and tough monetary policies in Ukraine. The NBU plans to ease its monetary policy in 2020, when it expects growth to pick up to 2.9%.